The Most Obvious Mobile Ad Unit and What the New York Times Got Wrong

Posted on Jul 13, 2012 | 37 comments


The New York Times recently ran an article titled, “Tech Companies Leave Phone Calls Behind.” I love the NY Times and am a paying subscriber. But this article missed the real trend.

The premise of the article is that in an increasingly online world ruled by techies who don’t want to talk on the phone, the era of being able to call the company in which you do business is winding down. They cite Quara, Google, Twitter & Facebook as obvious examples.

… phones cost money, phones do not scale. Besides, why call when you can use Google, or send a Twitter message?”

It’s hard to really find fault with the reporting. In some ways it appears factually correct. But it’s really missing two key factors that would be misleading to the uninitiated.

1. Tech Companies most certainly do take calls. But only from customers.
2. In the future I predict more inbound calls / not less

Say what? That doesn’t sound right! Google doesn’t seem to ever take calls from ME when I have a complaint! That’s because you are not their customer.

Let me explain:

 1. Tech Companies & Calls:
I once read a quote on Twitter that said,

If you use a tech service for free then product is you

In fact, it is. Google, Facebook & Twitter all provide free services to end users and we eat them up. But they make the overwhelming majority of their money from advertising.

They are selling audiences to advertisers. They are packaging you up into demographic and psychographic audiences – all the better to be purchased by brands trying to reach large niche audiences. They offer targeting tools for geographies, married people, parents, income levels, political affiliation – everything.

Whenever I talk about advertising people comment how much everybody hates ads. Only 2 problems:
- 94% of people hate paying for products even more (avg pay rate for ‘ad free’ tech products is < 6%)
- Ads are effective. It’s why people buy branded products

These tech companies also sell “intent” which means that when you search for “baby stroller” you’re going to get ads that are relevant to an expressed desire you’ve articulated.

Heck, they even “re-target” you as you may have noticed. You visited said stroller website and didn’t buy. For the next month you notice a lot more banner ads for baby strollers.

As I said, YOU are the product.

Customers?

They call Google, Facebook, Twitter as much as they want and whenever they want. Believe me. The customer are advertising agencies and brands themselves.

Of course tech companies with free products don’t want to take a phone call from end users. Unless you become a paying customer you’re just a cost center to them.

You’ll note, of course, that Apple will happily take calls from you. They’ve even opened this totally retro, old school concept called “a store” and it’s physical.

As Google starts offering more consumer products (read: mobile devices) I assure you they will find ways to take customer service  calls from you.

2. More Calls in the Future:
The premise of the article can be summed up in this quote

Officials at Facebook, Google and Twitter (all reached first by e-mail) say their users prefer to go online, finding it more pleasant and efficient than wading through a phone tree’”

Sounds plausible. But turns out it’s not factually correct.

According to Forrester Research (2011 report) 77% users who abandoned an online purchase cite the inability to speak to some as their primary reason for leaving.

This is consistent with data I see from RingRevenue, a company in which I invested and sit on the board.

Here’s some other things you might find interesting:

  • There are around 20 billion in-bound sales calls in the US each year
  • Online conversion of purchases drop considerably when the value of a product is above $150
  • Online conversion for any complex product (insurance, home alarm systems, mortgages) are also very low
  • Most high-value or complex product vendor actually PREFER calls. Why? Higher conversion rates (10-15x online conversion) and higher value at closure (up to 2x higher) due to up-sell & cross-sell potential

The best evidence is just how much higher these merchants will pay for qualified leads. Here are some representative rates that we’re seeing by category

So if I were Facebook or Twitter I most certainly would want to be driving phone calls. Just not to me. I’d be driving them to merchants who want to reach their potential customers through me.

Google already knows this. It’s why when search on many business types you now see phone numbers. Those are paid ads where they get paid per call.

And one piece of data that we’ve gathered that I haven’t seen published anywhere else is also very interested. We have found that when you put a phone number in an ad two unexpected factors go up

  • 12% higher click-through rates on the online ad (more clicks!)
  • 15 higher conversion of online lead forms

It turns out that these end users who supposedly find it more efficient and pleasant actually trust companies more when they have phone numbers. They seem like more real operations.

If you want to understand more about the real trends in phone calls there are a bunch of white papers here.

But What About Mobile?

An even more interesting thing about phone calls – and one that is about the future rather than the past which is why I think the Times reporter would have missed it by not asking the right people – mobile devices are likely to drive up inbound calls dramatically if these said tech companies that abhor phone calls can grok this trend.

You may have seen recently the WSJ report that Twitter is killing it with mobile ads while Facebook & Google have struggled. If you haven’t you should read the article – it’s an interesting trend.

Here’s the deal. Banner ads on your computer suck as I’ve outline before (presentation I gave at BlueGlass conference) (blog post I wrote on integrated adviertising & another one on online/offline integration ).

But if they suck on your computer Imagine just how bad they really suck on mobile devices where the screen size is much smaller. For me that’s why Twitter works. Their ads on mobile devices are increasing integrated (I was early in arguing for this – 2.5 years ago) and relevant and therefore get much greater conversion.

And what form of ad unit totally KILLS it on mobile? Duh. Phone numbers. When you’re interested in a product or service and can call in a single click and connect at the point you had interest – it’s a win for both customer and merchant.

Again, I have the data that proves it. RingRevenue grew it’s revenue 3x 2010 over 2011 and is on track to grow more than 3x again in 2012 with no signs of slowing. We have ridden the mobile wave.

One key to understanding how to make mobile campaigns work is that you must have call filtering between the push of the button and the call hitting a call center.

Here are some data provided by a BIA / Kelsey report (2012)

So having a software filter in front of the calls is key to making them cost effective. You need to be able to screen out the 52% of calls that are information requests with technology.

We’ve seen that with some mortgage providers where up to 50% of calls are for bank hours, location or directions. Software can make the costs of these calls trend towards zero and the 8% of pocket dials also self filter through software.

With software filters on inbound calls you can screen for obvious things that might affect you such as time of day (only take calls when you have people answering phones!), geography (no calls outside of my core territories), block out numbers that call too frequents (fraud), etc.

I have invested in 6 ad technology companies so I get to see trends across all segments of the industry. I can tell you that mobile ads are going to deliver serious revenue & growth to those who understand how they will be different from those that came from other media types. How ads work are always different across media types.

And for one of the most anticipated presentation every year – the venerable Meeker Report (see slide below), the opportunity is staring you in the eyes – don’t let the naysayers convince you mobile ads will not be big.

And don’t let any reporters convince you that phone calls are dying. Let them be your friend.

People still want calls.

Top image courtesy of Fotolia

  • http://devblog.ailon.org Alan Mendelevich

    Don’t you think that the positive trends for calls are related to a trend of more “older” people getting online and these are the people who are used to phone calls. Once these people .. uhm… die or just the number of them stops growing, the growth in phone activities will end. This is not backed by any data, just a thought after reading your post.

  • http://twitter.com/DavidGLocke David Locke

    Your point about Google taking phone calls is in dissonance with stories I’ve read from Patrick McKenzie of Bingo Card Creator and other small advertisers. Google seems to have an unhealthy obsession with trying to let algorithms handle their customer service because a call center can’t do “Google Scale”. I do hope that this changes but I think that it would take a bigger shift in company values than just you’re assurance.

  • http://flintanalytics.com/ Tim Flint

    Google has gotten better with their customer service, but they still aren’t a very customer service focused company. A few years ago we were spending $50k per month with Google and it was hard to get them on the phone or to respond in a timely manner. They have gotten better, but it is still hard to find a direct line in. In fact, the ability to call in is one of Adcenter’s only graces. They are great at taking a call and more enjoyable to deal with in person. However, their technology & market reach are less enjoyable to deal with.

  • http://joeyevoli.com/ Joe Yevoli

    How do you feel about the technology such as Olark.com, or other online chat customer support methods? If there’s an option, I know I almost always prefer to chat with a customer service rep. online than over the phone.

    I think people just want to know they’re going to get the answer they need quickly, and actually talk to a human being.

  • http://gregmberry.com Greg Berry

    We’ve been using Olark for quite a while… Our customers love it because they can get a question answered right away. We love it, because it cut down the number of support phone calls significantly. To Mark’s point, unfortunately this does not carry over to mobile.

  • http://www.zedscore.com Zeshan Ghory

    One of the things we’ve found is that providing a phone number for users (as opposed to customers), is that it can help build trust even if few people call it.

    This tends to be more significant in markets with lower internet maturity where a phone number gives people a communication channel they understand as well as adding some legitimacy to your business.

  • http://bothsidesofthetable.com msuster

    I know that’s what a lot of people think. It is not what the data supports or what my view of the future is. The reality is – for many interactions people want to talk with another human being

  • http://bothsidesofthetable.com msuster

    I think it’s a question of which customers. If your’e a large agency or brand – I feel confident that Google is taking your regular calls. Obviously they can’t scale this to take calls from every customer.

  • http://bothsidesofthetable.com msuster

    I think online chat is a great supplement. But the point is … I’m not talking about customer service so much as I’m talking about inbound sales leads.

  • http://bothsidesofthetable.com msuster

    Yeah. The problem is that once you hit scale (Twitter, Facebook, Google) it’s hard to cost-effectively do that. But I get your point. For some services it certainly makes sense.

  • MHSzymczyk

    But given younger demographic’s preference for chat over voice, do you think there will be a shift to text/chat over voice in the future through mobile? I’m not in the ‘texting is everything’ demographic, but I prefer to get pre-sales info on products or services I’m interested in via email/chat over voice already.

    Btw – are you available next week for 15 minutes? Would like to catch up and can bring some coffee over…

  • http://influitive.com/ Abdallah Al-Hakim

    love the article and the analysis Mark and thanks for sharing really interesting data. I completely see online conversations driving such things as buying books, wines, technology products and even something as expensive as cars but definitely insurance, mortgages and any banking matter needs to be conducted by phone.
    I like having access to phone numbers of companies I am dealing with but hate it when I am forced to submit my phone number when signing up for report for example because in many cases they followup with you over the phone and I only downloaded the report out of general interest!!

  • http://mofans.co/ amit nanda

    I can validate that even itsy bitsy potential customers can call Facebook – now that they are eager to ramp up revenue.

    Your data/analysis on phone calls via mobile Ad units is fantastic. One extension I wonder about is if response rates could be improved if users could text to a number rather than only call into it – texting may reduce hesitancy that comes with making a call (especially these days with calling declining and texting exploding). Texting may also be more viable as a lead gen mechanism for lower value/less complex products.

    I do not know of a click-to-text mobile ad unit (checked with Google and they don’t seem to support it yet). I think local businesses should get local long codes (virtual numbers) and combine it with click-to-text Ads – looking at your data on price per lead it sure seems text leads will be a lot higher value than click leads (and maybe as high as call leads?).

  • http://www.justanentrepreneur.com Philip Sugar

    Kick ass article and great references.

    How about this. What if you could turn the support into a product?

    I think Apple does this. You come into the store for support and buy stuff.

    Zappos did it, people spent a ton and weren’t price sensitive because of support.

    I think that many tech companies miss the fact they can turn support into revenue. What if you collected additional info and were able to resell that?

    Its not that it is that expensive, Seriously when you look at Google’s expenditures a big call center would not be a dent, definitely less than the extra benefits they give their employees. Its two things: First it is not what tech people do, they use Quora to find their answers. However, if you are mainstream, the first thing you have to realize is the world is not you. Secondly, none of these companies wants to be burdened by the very unsexy concept of tech support. Hundreds of dummies getting low pay and bringing down the culture? Yuck.

    I would say the PR alone might be positive ROI.

  • Matthias Galica

    Begs the question about click-to-map and it’s ilk, I’m curious Mr. Mark if you’ve got any similar insights on use cases or verticals that tap opportunities in the same vein. Card-linked offers seem to be the hubbub of the future, but I’m probably more interested in where Shopkick is at these days for instance.

  • https://plus.google.com/u/0/b/114718778524214371963/114718778524214371963/posts kidmercury

    i once worked for a company that spent over $1 million a month with google. we had them on the phone whenever we wanted, our own dedicated rep too. and they took us out to the best restaurants in the world. i’m a former vegetarian turned pescetarian, i didn’t get into seafood until google started taking us out to eat.

  • https://plus.google.com/u/0/b/114718778524214371963/114718778524214371963/posts kidmercury

    really great post mark, very educational. i appreciate the effort you put into this.

  • naren

    in the context of wsj article..”Twitter’s Mobile Ads Begin to Click”..can it be that because of the mobile screen..where in only few tweets are displayed..and the user is more likely to see the promoted tweet?

  • laurayecies

    There are times where the phone is just so much more effective. Don’t get me wrong – I love automation – I would 10x rather book a flight myself on a website then talk to someone. But I had an experience just the other day that proved to me the point of your post. I transfered my yecies.org domain to Godaddy from Yahoo – I bought it on Yahoo during some promo years ago and it’s been a pain since they were just a reseller of a service. I bought the service on the Godaddy website then proceeded with the transfer process. I got stuck because I didn’t have the security key info from Yahoo. Just as I was getting frustrated staring at my screen I received a phone call from Godaddy – their automated system noticed the non-completion of my transfer. The rep walked me through the rest of the process (they had instructions how to get the code from Yahoo. In the process he told me the benefits of moving some other things I was doing on Yahoo small bus. service so I upgraged my account. It was a terrific experience and a great example using the phone for customer sat and sales. (I still hate their TV ads – fortunately I don’t watch a lot of sports and don’t have to see them much).

  • laurayecies

    One other thing – you are right that most end users think their account is what Google’s business is and it’s not correct. GMail and GDrive are a means to an advertising end. As people realize that they will be more interested (I believe) in getting certain services, such as cloud, from a dedicated provider.

  • http://www.justanentrepreneur.com Philip Sugar

    You confirmed my point, thanks. You can hate their ads and the founder (who sold out) is rather unconventional, but he has one of the all time great posts on the 16 rules for success: http://www.bobparsons.me/bp_16_rules.php?ci=21428

  • Patrick Sullivan

    This is a great post and totally makes up for that boring “my friend Dave” garbage you put up a couple days ago. ;)

    On a serious note, I can’t agree with you more (not about Dave but about voice). My company focuses on voice technology which many people think we are nuts since “phones are going away”. Our viewpoint is that they are not going away, just evolving. Voice is an data application that will be integrated to everything in the future. There are many open source projects that are now making it even easier then ever to get control of the underlying communication and people will always need to talk (as you pointed out in your post). Voice is not leaving, just evolving.

  • CMKelly

    Since most new computers come with cameras and microphones, wouldn’t that make them competitive with phones in the click to talk sales lead arena? And wouldn’t that be easier to track for payment by the referring source than including a phone number?

  • Nathan Schor

    Great insights and supporting data and another reminder why I rarely miss this blog. But in response to your observation that “mobile devices are likely to drive up inbound calls dramatically if these said tech companies that abhor phone calls can grok this trend”, there is no question they will since those firms are merely extending an already proven revenue online model.

    Every major online ecommerce player is in the phone business because the mobile devices are obvious sales platforms conveniently and lucratively ‘personalized’ inadvertently (or more accurately in this case, literally ‘unintentionally’) by its users. But this method of attracting purchasing intention is not so radical but just another example of a dual process revenue model the web made possible.

    Users go to Google for search BUT it earns revenue for ads; likewise, for Facebook, except in its case the motivating reason is socializing. In both cases, however, an axiom of offline commerce has been removed. The one-to-one correspondence between buyer’s reason for engaging sellers and how the latter earn revenue is notably absent in the most successful online business models. The originating reason attracting users to a service is NOT how Google, Facebook and many others earns revenue. Instead, their considerable income streams are due to an accompanying, seemingly secondary, function. Hence, the oft-quoted observation about customers morphing into products in order to gain access to a ‘coincidentally’ free service.

    Accordingly, in the context of the above digital masquerade, the pretext of subsidized phone service is the initiating incentive and a powerful sales channel, always at hand, is the revenue source. Companies clearly win, users not so much.

  • http://twitter.com/SwiitApps Locally

    Great post supported with a lot of data. We agree that Mobile Ads are going to make it, but sincerely doubt that a convenient phone call through the Ad Unit is the thing that would take the mobile Ad business over the cliff. This has existed on Websites too.

    When phones were invented, everyone used to be excited when the phone rang until taking phone calls began to stink (or sting) and so they invented voice mail and mechanized speech-systems (e.g., customer service at banks, credit card companies, utilities, etc) to deal with phone calls later.

    For certain services like making a restaurant reservation a phone call may be useful but will soon be replaced by restaurant reservation apps.

    But we totally agree with — “I have invested in 6 ad technology companies so I get to see trends across all segments of the industry. I can tell you that mobile ads are going to deliver serious revenue & growth to those who understand how they will be different from those that came from other media types. How ads work are always different across media types”

  • http://www.pingup.com/ markslater

    there is a shift to text – pingup.com amd talkto.com are two VC funded companies in boston doing this – its very exciting. businesses want to receive texts / char from consumers and consumers want to text businesses. no brainer.

  • Richard Rosen

    Nice post Mark, but there is one issue with your analysis. Comparing rates for clicks and calls is like comparing rates for flour and cupcakes. Here’s why: Say is takes 10 one dollar clicks to convert to a landing page ($10), then your conversion to a call is 10% ($100). Now clicks and calls are equal. The problem is, as you point out, that not all calls are qualified. If 50% of the calls are “sales ready” then you’ve paid $200 in the true comparable cost. Publishers dont want to be paid $100 to generate a call, when they can get a comparable $200 in clicks.

    The problem with ppcall today is that there is no benefit for the consumer (caller).

    My company, FastCall, recently called 5,000 local businesses and we found 2/3 were not available to take a phone call. We also surveyed 1000 consumers and found (big surprise) that consumers want a local merchant who is available to help them.
    The big opportunity in calls is not pay per call, but rather solving the customer service problem that exists for the 2 out of 3 consumers who call a local merchant who is “not available”. Connecting a call to an unavailable merchant is a poor experience for the consumer, a poor experience for the merchant and a poor experience for the publisher.
    There is a fundamental disconnect in supply and demand at the local level – one that can be solved with “calls.” Applications connecting consumer “demand” with merchant “supply” is the opportunity much bigger than ppcall.
    PPcall needs to be an honor for the merchant because the merchant provides great service by phone they are permitted to take and pay for calls. Not a discount from a click.

  • http://newventurist.com/ Babs Carryer

    Great article and insights. Thanks!

  • http://www.pingup.com/ markslater

    there is so much data – i would say irrefutable data that shows that the younger generations are not only NOT talking – but WONT talk. they want to communicate – yes – but they are going to tap and not talk. people will always need to talk – yes – but not with their voice.

  • http://www.pingup.com/ markslater

    bang on.

    we are doing this – pingup.

    you could not be more correct richard.

  • Nik Souris

    Well said – Key takeaways – phone calls won’t go down if sales go up! need a software filter – perhaps something like @holdfree networks #SmartCall

  • http://www.mobincube.com/ ignacio_mobincube

    Do you recommend any reading regarding how to turn free user into the product? We are offering a freemium based model in our company, so it would be great to learn the best practices without bothering our user.

    Thanks!

  • http://cottageme.com/ cottageme

    Very good post! Thanks a lot.

  • Tyler Moore

    Great post, Mark. As much as I dislike talking on the phone, I’ll put up with it if I think it will make me more money, or make it easier to make money.

  • http://www.yose.com/ Christian Geissendoerfer YOOSE

    Thanks for reminding on the click to call option in mobile ads! :)

  • http://searchsimplicity.com/ Gregory Smith

    I recently had several clients want us to make sure there Website was visible to most cell phone carriers. Mobile marketing has expanded in ways, I never imagined. Great post…..

  • Greg Matinian

    Vardkeze